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As Cities Turn Away Mega Events, What Will Sponsors Do?

By Jim Andrews Mar 18, 2013

As Cities Turn Away Mega Events, What Will Sponsors Do?

Following news last week that residents of Vienna resoundingly rejected the city’s plan to bid for the 2028 Olympic Games, I had an interesting discussion with my colleague John Kristick, global CEO of GroupM ESP. John is well qualified to discuss this issue, having been the managing director of the U.S. bid to host the 2022 FIFA World Cup.

He believes the tables are turning against the big international sports federations as they seek host cities for their championship events. Until recently, the federations have had the upper hand, with plenty of municipalities and countries willing to bend over backward to attract the tourism dollars and other positive economic impacts that can come with major events.

But as John pointed out, the rightsholders of these events have taken advantage of their position to the point where “partnerships” with host cities have become too one-sided and too costly. Overplaying their hand appears to be coming back to slap the federations in the face, as evidenced by a number of recent developments, including: the Vienna referendum vote; the rejection 10 days earlier by Swiss voters of a bid by Davos and St. Moritz to bid for the 2022 Winter Games; the lack of bidders for UEFA’s Euro 2020; and decisions by New York City and Chicago to bow out of Olympic bidding for the foreseeable future.

As John put it in our email exchange: “The world has changed and sports federations need to understand that, or the only markets where big events are going to occur are places where extraordinary and distorted wealth look beyond common sense, e.g. the 2022 World Cup in Qatar.”

Countries and cities already committed to hosting events are looking to scale back the ever-growing costs. Today’s headlines include news of a cap on federal spending by the Russian government for 2018 World Cup projects and austerity measures by the Madrid bid committee for the 2020 Olympic Games.

A new era of limited options for mega event hosts would negatively impact sponsors. World Cup and Olympic sponsors have become accustomed to a rotation of desirable markets that allow them a global platform while making commitments to important emerging and established markets.

So will sponsors apply pressure to the federations to change their ways?

I doubt they will make too much noise publicly unless/until the situation reaches “crisis” proportions, i.e., no decent candidate cities are willing to bid. Behind the scenes, I can see the savvier sponsors already raising the issue as they see the writing on the wall.

It will be very interesting to monitor developments on this front. Stay tuned.

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international olympics sports events

 

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Jim Andrews

About the Author

A 30-year sponsorship industry veteran, Jim is responsible for developing and sharing thought-leadership content based on ESP Properties’ groundbreaking work in the areas of sponsorship strategy, valuation, measurement, digital content, data-driven marketing and fan engagement.

In addition to identifying key trends and delivering his unique insights into the critical issues facing rightsholders and their commercial partners, Jim is the chairman of the Annual Sponsorship Conference, responsible for the program and speakers, as well as hosting and delivering the event’s opening address. He also is responsible for the company’s annual report and forecast of overall sponsorship spending, as well as its compilation of biggest spending companies and annual industry surveys.

A frequent media commentator and guest, Jim has been a featured speaker at hundreds of sports, entertainment and marketing conferences around the world.

 

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